John Colmey and David Liebhold
May 24, 1999
When the end came for Suharto, Indonesia’s long-serving President appeared oddly passive. As students and angry mobs took to the streets and soldiers responded with gunfire and tear gas, the five-star general hovered in the background, making few attempts to set things right. When he finally quit a year ago this week, he stood meekly to the side as his successor, B.J. Habibie, took the oath of office. Suharto has hardly been heard from since.
But Indonesia’s onetime autocrat has been far busier than most of his countrymen realize. Just after his fall from power there began feverish movements of his personal fortune. In July 1998, reports emerged that a staggering sum of money linked to Indonesia had been shifted from a bank in Switzerland to another in Austria, now considered a safer haven for hush-hush deposits. The transfer caught the attention of the United States Treasury, which tracks such movements, and set in motion diplomatic inquiries in Vienna. Now, as part of a four-month investigation that covered 11 countries, TIME has learned that $9 billion of Suharto money was transferred from Switzerland to a nominee bank account in Austria. Not bad for a man whose presidential salary was $1,764 a month when he left office. (Suharto, for his part, denies that he has any bank deposits abroad and insists that his wealth amounts to a mere 19 hectares of land in Indonesia, plus $2.4 million in savings.)
Those billions are just part of the Suharto wealth. Though the Asian financial crisis has trimmed the family empire considerably, the former President and his children retain a staggering fortune. It was built over three decades from a skein of companies, monopolies and control over vast sectors of economic activity in Indonesia–from oil exports to humble pilgrims making the yearly visit to Mecca. (They flew on planes leased from companies controlled by Suharto’s children.) According to data from the National Land Agency and Properti Indonesia magazine, the Suharto family on its own or through corporate entities controls some 3.6 million hectares of real estate in Indonesia, an area larger than Belgium. That includes 100,000 sq m of prime office space in Jakarta and nearly 40% of the entire province of East Timor.
Within Indonesia, the six Suharto offspring have significant equity in at least 564 companies, and their overseas interests include hundreds of other firms, scattered from the U.S. to Uzbekistan, the Netherlands, Nigeria and Vanuatu. The Suhartos also possess plenty of the trappings of wealth. In addition to a $4 million hunting ranch in New Zealand and a half-share in a $4 million yacht moored outside Darwin, Australia, youngest son Hutomo Mandala Putra (nicknamed Tommy) owns a 75% stake in an 18-hole golf course with 22 luxury apartments in Ascot, England. Bambang Trihatmodjo, Suharto’s second son, has an $8 million penthouse in Singapore and a $12 million mansion in an exclusive neighborhood of Los Angeles, two doors down from rock star Rod Stewart and just up the street from his brother Sigit Harjoyudanto’s $9 million home. Eldest daughter Siti Hardiyanti Rukmana may have sold her Boeing 747-200 jumbo jet, but the family’s fleet of planes included, at least until recently, a DC-10, a blue-and-red Boeing 737, a Canadian Challenger 601 and a BAC-111. The latter once belonged to the Royal Squadron of Britain’s Queen Elizabeth II, according to Dudi Sudibyo, managing editor of Indonesia’s Angkasa aerospace magazine.
Neither Suharto nor his six children responded to requests for interviews, though lawyers for the former President and son Bambang asserted that their clients did nothing illegal. Indeed, no one has proven that the Suhartos broke any laws. Their companies mostly consist of operating entities that turn profits, create jobs and import Western technology. Yet allegations that the former First Family benefited from favoritism, commonly heard in Indonesia since the early 1980s, began to grow louder when the former President resigned. His successor quickly announced an official investigation into such charges. Tommy, the youngest son whose corporate empire at one point included the Lamborghini sports car company, is already in legal jeopardy, facing charges of defrauding a state agency of $11 million in a real estate deal. The South Jakarta district court recently rejected a plea from Tommy’s lawyers that he be tried in a civil court and is proceeding with a criminal trial.
In an interview at the State Palace, Habibie told TIME he will not cover up for his former mentor, but he has so far declined to freeze the family’s holdings or to follow up on the investigation in any meaningful way. Private asset-tracing firms are excited at the prospect of a Suharto treasure hunt, if only Jakarta would hire them. “In terms of dollars, we think this could be bigger than anything we have ever seen before,” says Stephen Vickers, Asia chief for Kroll Associates, which helped investigate the wealth of the Philippines’ former President Ferdinand Marcos. “My bags are packed.”
The search won’t start in earnest unless the man in charge of the government’s investigation, Attorney General Andi Muhammad Ghalib, gives the go-ahead. Ghalib, a three-star general in the Indonesian military, told TIME that he has found no evidence that his former supreme commander wrongly acquired state assets. But Ghalib has been moving slowly, and some of his own staff members are not convinced the investigation is serious. In the opinion of an official in the Attorney General’s office, “Ghalib is on a mission to protect Suharto.”
Nonetheless, the code of secrecy shielding the family is breaking down. After hundreds of interviews with former and current Suharto friends and government officials, business associates, lawyers, accountants, bankers and relatives, as well as examinations of dozens of documents (including bank records of outstanding loans), TIME correspondents found indications that at least $73 billion passed through the family’s hands between 1966 and last year. Much of that was from the mining, timber, commodities and petroleum industries. Bad investments and Indonesia’s financial crisis have reduced the sum substantially. But evidence indicates that Suharto and his six children still have a conservatively estimated $15 billion in cash, shares, corporate assets, real estate, jewelry and fine art–including works by Indonesian masters Affandi and Basoeki Abdullah in the collection of Siti Hediati Hariyadi, the middle daughter known as “Titiek.”
Suharto laid the foundation for the family fortune by establishing the intricate nationwide system of patronage that kept him in power for 32 years. His children, in turn, parlayed their ties to the President into the role of middlemen for government purchases and sales of oil products, plastics, arms, airplane parts and petrochemicals. They held monopolies on the distribution and import of major commodities. They obtained low-interest loans by colluding with or even strong-arming bankers, who were often afraid to ask for repayment. Subarjo Joyosumarto, managing director of Bank Indonesia, the central bank, confirms that during the time of Suharto, “there was an environment that made it difficult for the state banks to refuse them.”
While the Indonesian economy was growing fast, it was possible to make light of the Suhartos’ rent-seeking ways. Now, with half the population below the poverty line as a result of the financial crash, there is little doubt that the family grew wealthy at the expense of the nation. A former business associate of the children estimates that they skipped tax payments of between $2.5 billion and $10 billion on commissions alone. “It is very likely that none of the Suharto companies has ever paid more than 10% of its real tax obligations,” says Teten Masduki, an executive member of Indonesian Corruption Watch, an anti-graft non-governmental organization. “Can you imagine how much revenue has been forgone?”
Many Indonesians also blame Suharto for creating a climate of corruption that pervaded the entire economy. The World Bank estimates that as much as 30% of Indonesia’s development budget over two decades disappeared through civil-service-wide corruption that filtered down from the top. “If you don’t pay bribes, people think you’re odd,” says Edwin Soeryadjaya, a director of an Indonesian-U.S. telecommunications joint venture. “It’s very sad. I cannot say that I’m proud to be an Indonesian. This is one of the most corrupt countries in the world.”
How did Suharto Inc. attain its wealth, its power and its hold over the imaginations of millions of Indonesians? When Suharto became acting President of Indonesia in 1967, his unique blend of forcefulness and Javanese political subtlety was already manifest. The ousting of “President for Life” Sukarno, the nationalist founder of the country, took two years and, through an accompanying anti-communist purge, claimed as many as 500,000 lives. But Suharto, an obscure general from a hardscrabble village in central Java, led an outwardly modest life. He and his late wife Siti Hartinah (“Madam Tien”) initially lived in a simple bungalow in the Menteng district of Jakarta and drove a 1964 Ford Galaxy. That was in marked contrast to Sukarno, the self-styled “God-King,” with his grand presidential palace and his glamorous third wife Dewi, a former Japanese hostess at Tokyo’s Copacabana nightclub.
Behind the facade, however, Suharto showed an early interest in making money. In the 1950s, he was allegedly involved in sugar smuggling and other extra-military activities in Central Java that may have cost him command of the Army’s Diponegoro Division during a 1959 anti-corruption drive. In his autobiography, Suharto asserts that he bartered sugar for rice to ease a local food shortage and that he did not benefit personally. In any case, the military transferred Suharto to a less influential position at the army staff college in Bandung, West Java.
In 1966, Suharto Inc. began to take shape. Before being officially named President, Suharto issued Decree No. 8 to seize two Sukarno-controlled conglomerates with combined assets of $2 billion. They became PT Pilot Project Berdikari, a company that Suharto placed under the management of Achmad Tirtosudiro, a former general who now heads a powerful Muslim organization founded by President Habibie. The firm was to become one of the main levers of the Suharto empire.
The President’s fortunes began to soar along with those of a few close associates, most prominently Liem Sioe Liong and The Kian Seng, better known as Mohammad “Bob” Hasan. In late 1969, Suharto gave a partial monopoly–it later became total–over the import, milling and distribution of wheat and flour to PT Bogasari Flour Mills, controlled by Liem’s Salim Group. Over the years Liem–known as “Uncle Liem” to the Suharto brood–and Hasan became Suharto’s most trusted non-family associates and eventually amassed vast commercial empires.
The bedrock of the Suharto fortune was the presidential yayasan, or foundation. Dozens were set up, ostensibly as charities, and they have in fact funded a large number of hospitals, schools and mosques. But the foundations were also giant slush funds for the investment projects of the Suhartos and their cronies, as well as for the ex-President’s political machine, Golkar. According to George Aditjondro, a sociology lecturer at Australia’s University of Newcastle, they ultimately numbered 97 and were controlled by Suharto, his wife (who died in 1996), her relatives in the countryside, his cousin and half-brother, the six children, their spouses and parents, trusted military men and associates such as Habibie, Hasan and Liem. “The foundations bought stocks, built companies, lent money to businessmen,” says Adnan Buyung Nasution, a lawyer who last year tried unsuccessfully to set up an independent commission on the Suharto wealth.
The foundations accepted “donations,” though they were often less than voluntary. Beginning in 1978, all state-owned banks were required to give 2.5% of their profits to both the Dharmais and Supersemar foundations, according to former Attorney General Soedjono Atmonegoro. Suharto’s Decree No. 92, in 1996, required that each taxpayer and company making more than $40,000 a year donate 2% of income to the Dana Sejahtera Mandiri foundation, set up to support poverty-alleviation programs (the order was rescinded last July). To this day, civil servants and members of the military donate a portion of their monthly salaries to the Amal Bakti Muslim Pancasila foundation, which was used by Suharto to win Muslim support.
While “donations” provided most of the foundations’ revenue, there were other sources as well. In 1978, Suharto foundations took control of 60% of Bank Duta, a leading private bank, according to a former Bank Duta official. That share was gradually increased to 87%. The foundations invested heavily in private companies established by Suharto family members and cronies. After that, a helpful ministry or state-owned firm would award a contract or a monopoly to those companies.
Since Suharto’s downfall, the foundations have been a major target of Indonesian investigators. Soon after Suharto’s resignation, then-Attorney General Soedjono examined the books of the four largest yayasan. What he found was unsettling. “These foundations were set up to deliver social services,” he says, “but Suharto had distributed the money to his children and friends.” Soedjono discovered that one of the largest foundations, Supersemar, had dispersed 84% of its funds on unauthorized pursuits, including loans to companies owned by Suharto’s children and friends. Suharto, as chairman, had to sign any check over $50,000. Soedjono submitted a preliminary report on his findings to President Habibie last June. He was fired five hours later. (The President says Soedjono was dismissed because he stepped outside the line of command on another matter.)
OIL AND LAND
The Suharto reach extended well beyond the foundations’ interests, and few deals were more lucrative than the family’s oil businesses. In his first decade in power, Suharto allowed state oil conglomerate Pertamina to be run as a private fief by its founder Ibnu Sutowo, a former general once known as the second most powerful man in Indonesia. Sutowo’s plan to build a huge tanker fleet for Pertamina brought it to the brink of financial collapse in 1975. He was fired the following year, though it wasn’t clear whether the cause was mismanagement or his political ambitions. Now 84, Sutowo tells TIME it was neither. He says Suharto asked him in 1976 to set up a second trading company to ship Indonesian crude oil to Japan. “He said to me, ‘I want you to take $0.10 for every barrel traded by the new company,'” Sutowo recalls. “When I said no, I think he was shocked.”
After Sutowo was fired, Pertamina eventually imported and exported much of its oil through Perta Oil Marketing and Permindo Oil Trading, two small companies in which Tommy and older brother Bambang acquired significant stakes in the mid-1980s. According to a senior official in Habibie’s government, the firms received a commission of $0.30 to $0.35 a barrel. In the 1997-98 fiscal year, the two companies handled an average of 500,000 barrels a day, for yearly commissions of more than $50 million. Says former Mines and Energy Minister Subroto: “Pertamina could have exported directly. There was no need for these companies.”
In addition, a former business associate of Tommy and Bambang says there were extra, unofficial markups on oil exports and imports that earned the firms as much as $200 million a year in the 1980s, when prices were high, and about half that in the 1990s. Suharto family companies received Pertamina’s contracts for insurance, security, food supplies and other services–a total of 170 contracts in all. Last year, shortly after Suharto’s fall, Pertamina canceled many of them and announced instant savings of $99 million a year. Says the former associate of the Suharto scions: “They milked Pertamina like a cow.”
One major Suharto money spinner was PT Nusantara Ampera Bakti, or Nusamba, which was launched with $1.5 billion in 1981 by three of the foundations, together with Bob Hasan and Suharto’s eldest son Sigit (who held 10% each). The firm became a sprawling conglomerate with more than 30 subsidiaries in finance, energy, pulp and paper, metal and automobiles. Nusamba’s jewel was a 4.7% share in Freeport Indonesia, an American-controlled company that runs the world’s largest gold mine in the province of Irian Jaya. In 1992 the foundations apparently transferred their 80% share to Hasan, though it is not clear how much he paid for it. So far, government investigators have not asked to see Nusamba’s books. Says Otto Cornelis Kaligis, head of Suharto’s eight-member legal team: “When you talk about Nusamba you have to ask Bob Hasan. In the investigation of President Suharto, the Attorney General never asked any questions about Nusamba.”
The family profited not only by winning concessions from the government but occasionally by disrupting the lives of individual Indonesians who stood in the way. When Suharto wanted to build a cattle ranch getaway in West Java in 1973, he displaced the inhabitants of five villages spread over 751 hectares. According to official records, he paid a total of $5,243 in compensation. Some villagers say they got nothing. Muhammad Hasanuddin, who was a boy at the time, remembers when his family’s two-hectare rice farm was lost. “We saw the fat cows, herded by dozens of men pompously riding on horseback, trampling our ruined fields. The whole family could only cry.” Hasanuddin’s father ended up as a pedicab driver in Jakarta.
Similar stories abound. In 1996, a company owned by Tommy forced villagers off their land in Bali to build a 650-hectare resort. The firm had a permit for only 130 hectares, which it illegally expanded, according to Sonny Qodri, chairman of Bali’s Legal Aid Institute. Residents who refused to sign an agreement to sell their land were intimidated, beaten and sometimes put in a pond up to their necks. Two were brought to court and jailed for six months. Nothing remains of the project now: recession hit just as the bulldozers were moving in.
Hasan Basri Durin, chairman of the National Land Agency and Minister of Land Affairs, says the Suharto family typically paid peanuts for the property it acquired–the average was 6% of market value–and reluctant sellers often changed their minds after visits from thugs or soldiers. “Sometimes they didn’t pay one cent,” says Hasan. “But it’s legal because they [the Suhartos] have the documents.” Only about half of Indonesia’s farmers hold a registered title to their land, so proving ownership can be difficult–and proving intimidation even harder. As a result, few have come forward to complain.
CHILDREN OF FORTUNE
For years, Indonesia’s corruption was the kind of petty favor-buying and commission-giving commonly found in the developing world. Two factors pushed the country into a league of its own. The first was Indonesia’s position as an up-and-coming star performer in the Asian economic miracle, which brought a cascade of funds pouring into businesses and real estate. The World Bank estimates that between 1988 and 1996, Indonesia received more than $130 billion in foreign investment. “All this has been possible under the eyes of the West, which supported Suharto for 30 years,” says Carel Mohn, spokesperson for Transparency International, a non-governmental organization based in Berlin.
The second factor was “the children,” as the Suharto kids are known. All six are involved in business, a calling for which they were groomed from an early age. “I remember when we were younger, me and Bambang and his other friends would go over to Uncle Liem’s house,” says a childhood pal of Suharto’s second son. “Uncle Liem would always give us a package of money wrapped in newspaper.” The package, he recalls, would contain banknotes worth $1,000 or more. Says Wati Abdulgani, a businesswoman who dealt with a family company in the 1980s: “The kids saw what was being given to their uncles and they thought, ‘What about us, when we grow up?'”
Sigit, the eldest son, was apparently pushed into business by his mother, Madam Tien, whose own behind-the-scenes dealings in the 1970s earned her the nickname “Madam Tien Percent.” A friend of Mrs. Suharto recalls a conversation with her at the time the government was building Jakarta’s Soekarno-Hatta International Airport. “She told me, ‘I want Sigit to learn about business,'” says the friend. “I told her I thought he should first finish university. She said, ‘No, no, Sigit can’t think straight.'” Two sources who worked on the airport project say that by the time both terminals were finished in 1984, $78.2 million had been given to Sigit in markups that appeared as cost overruns. He graduated to bigger deals. The collection of ticket proceeds from a national lottery, set up in 1988 by the Department of Social Affairs, was handled by a Sigit-linked company until Muslim leaders’ anti-gambling protests forced its closure in 1993. “The gambling scheme earned Sigit and his company millions of dollars every week,” says Christianto Wibisono of the Indonesian Business Data Center, which has been gathering information on Suharto-related businesses and other firms since 1980.
Second son Bambang, who founded the Bimantara Group in 1981 with two members of his former rock band, was helped in business by Uncle Liem. From 1967 until last year, the National Logistics Agency (Bulog) imported and distributed basic commodities such as wheat, sugar, soybeans and rice through Suharto-linked companies, including six belonging to Liem. At Bambang’s request, Liem gave him a slice of the business. Through sugar trading alone, the son is estimated to have earned as much as $70 million a year, essentially for stamping documents. The system worked so well that each of the children was given a cut as he or she moved into business, a practice that continued until last year. From 1997 to ’98, Liem had a contract from Bulog to import about 2 million tons of rice valued at $657 million. As part of that contract, Suharto’s youngest daughter Siti Hutami Endang Adiningsih (“Mamiek”) imported 300,000 tons of rice worth $90.3 million. Over the past 18 years, under the pretense of stabilizing food prices, the Suhartos’ deals with Bulog have earned them an estimated $3 billion to $5 billion, according to a former government official.
Eldest child Tutut rose to become the queen bee of the Suharto clan. The base of her empire is Citra Lamtoro Gung Group, and its first big business was building and operating toll roads. The group’s toll-road arm won its first project in 1987 after the government turned down two competing bids. Financing came from two government banks, a state-owned cement company and a Suharto foundation. When the president of state-owned Bank Bumi Daya turned down Tutut’s request for an interest-free loan, he was fired. By the mid-1990s, her roads were earning $210,000 a day, and in 1995 the concession on her Intra Urban Tollway System, the most lucrative in Indonesia, was extended through the year 2024. Explains Teddy Kharsadi, director of corporate affairs at toll-road company PT Citra Marga Nusaphala: “The extension was a reasonable consequence of our investment.”
Tutut’s empire also includes telecommunications, banking, plantations, flour milling, construction, forestry, sugar-refining and trading. Foreign companies learned to take on a Suharto as a partner if they wanted to do business in Indonesia, and Tutut was first on most lists. “A lot of big multinationals insisted on having the right connections, and these were certainly useful to them,” says Graeme Robertson, an Australian-born Indonesian citizen whose Swabara Group is active in coal and gold mining. At the peak of Tutut’s power, according to sources close to the family, investors seeking to meet her first had to pay as much as $50,000 as a “consulting fee” to her minders.
In the early 1990s, Indonesia began to heed the advice of market-oriented economists to privatize many of its state firms. The First Family was a major beneficiary. Suharto ended the state telecommunications monopoly in 1993–by giving licenses for an international direct-dial operation and for Indonesia’s first digital mobile phone network to Bambang’s PT Satelit Palapa Indonesia (Satelindo). At the same time, state-owned PT Telkom transferred its customer base to Satelindo when it launched its own satellite, the country’s third, with the help of a $120 million loan from the U.S. Export-Import Bank. TIME has learned that Jakarta gave Satelindo the licenses and Telkom’s customers without a tender or payment. Thanks to the government, Bambang found himself in control of the company, which the market valued at $2.3 billion in 1995 when a subsidiary of Germany’s Deutsche Telekom paid $586 million for a 25% stake. Bambang also received a major share of a $90 million facilitation fee from Deutsche Telekom as part of the sale.
TOO MUCH OF A GOOD THING
The Suharto children’s interests became so extensive they started colliding with each other. Bambang and Tutut vied to set up their own television stations. Tommy competed with brother Sigit in aviation and with Bambang in shipping and car production. In 1990 the government solicited bids for a contract to provide switching equipment for 350,000 telephone lines. Japan’s NEC teamed up with a company controlled by Bambang. Competitor AT&T gave Tutut a 25% share in its local venture, now called PT Lucent Technologies Indonesia. The project was ultimately split 50-50 between Tutut’s AT&T group and Bambang’s NEC. In 1996, Tutut came up against Sigit for rights to develop the vast Busang gold mine in East Kalimantan. Tutut’s partner, Canadian company Barrick Gold, was opposed by Sigit’s partner, Bre-X Minerals. This time, both sides lost; Busang turned out to be the biggest hoax in mining history.
The competition grew so intense that the Suharto progeny began seeking monopolies in ever-narrower lines of business. Bambang got a contract to import the special paper used by the national mint. Tutut took over the processing of drivers’ licenses. A company owned by Sigit’s wife, Elsye, became the sole authorized producer of Indonesia’s mandatory identification cards. In 1996 Suharto grandson Ari Sigit devised a scheme to sell $0.25 revenue stickers as proof of tax payment for every bottle of beer and alcohol consumed in Indonesia (that business collapsed when producers stopped shipping beer to tourist mecca Bali in protest). Nine months before Suharto’s resignation, Ari was gearing up to launch a “national shoe project”–all Indonesian children would have to buy school shoes from his company. “At the end,” says an American lawyer with 20 years’ experience in Indonesia, “the only thing that was transparent was the corruption.”
When the Suharto regime fell, the children used their influence to extricate themselves from ailing businesses and debts. In April 1994, Tommy launched the Goro supermarket chain with two of his companies and the Central Village Cooperative, a large, government-run farmers’ organization. Together they borrowed more than $100 million in loans, according to Bank Bumi Daya records. No repayments were ever made on the loans. On May 4, 1998, Tommy sold his shares to the farmers and their cooperative for $112 million in cash, saddling them with the entire debt. “The children were very wild,” says Ibnu Hartomo, younger brother of Madam Tien. “It seems that they have forgotten about ethics.” Angry mobs burned down one Goro store in south Jakarta during riots in May 1998, a week before Suharto resigned.
Though much of the Suharto fortune has been lost through mismanagement and the country’s economic collapse–Tommy’s PT Sempati Air, for instance, went bust in 1998–the family still has many viable businesses. One of many small examples: Sigit’s PT Panutan Selaras produces 25% of the “premix” high-octane gasoline used in Indonesian cars and owns 22 filling stations in Jakarta, Surabaya and Central Java. Tommy’s PT Humpuss Trading, meanwhile, is also producing the high-end gasoline.
And then there’s real estate. While prices have plunged in Indonesia, the family’s property holdings are today worth $1 billion, and many–including rubber and sugar plantations, malls and hotels–continue to bring in revenue. In the mid-1980s, Bambang paid the government $700 per sq m for a plot of land in central Jakarta on which now sits the Grand Hyatt Hotel, the prime asset of his publicly listed PT Plaza Indonesia Realty. In Bali, the children ended up with some of the most lucrative gems of the tourist industry: Bali Cliff Hotel (Sigit), Sheraton Nusa Indah Resort (Bambang), Sheraton Laguna Nusa Dua (Bambang), Bali Intercontinental Resort (Bambang, until two months ago), Nikko Royal Hotel (Sigit, until six months ago), the Four Seasons Resort in Jimbaran (Tommy) and the Bali Golf and Country Club in Nusa Dua (Tommy). Tutut and Tommy bought the land under Jakarta’s National Police Headquarters for a fifth of its market value. Minister of Forestry Muslimin Nasution says 4.5 million hectares of forest and plantation land is connected to the Suharto children. Observes Melbourne-based economist Michael Backman, who has written about the Suhartos in his book Asian Eclipse: Exploring the Dark Side of Business in Asia: “Anyone who says the family businesses are broke has got it wrong. They still have shares in timber, oil palm plantations and hotels, all of which are big dollar earners.”
THE WHEELS OF JUSTICE
Suharto continues to insist that his assets are modest and located entirely in Indonesia. “He told me, ‘I don’t have one cent abroad,'” says Kaligis, his top lawyer. “If anyone is found to have set up an account in his name overseas, he has instructed me to launch a lawsuit against them.” Since Suharto resigned, son Bambang and his family have been spending time in Los Angeles; Titiek has been in Boston, where her son goes to high school. The rest of the Suhartos live most of the year in Indonesia. Sigit spends hours on his favorite Versace couch (no one else is allowed to sit on it), playing video games and watching tapes of Javanese shadow puppet performances.
But the wheels of justice have barely started moving. Attorney General Ghalib says Suharto has handed over to the government seven foundations with $690 million in assets. Members of Ghalib’s own staff, however, say Suharto continues to control those holdings and that the foundations are worth far more than that. Three of the foundations together have an 87% stake in Bank Duta, which had assets of $1 billion in 1990. Yet in investigating the foundations, Ghalib has not gone beyond their printed records, which he has turned over to a state auditing board for analysis. Says Ghalib’s predecessor Soedjono: “This investigation isn’t going anywhere.”
The ongoing reform of Indonesia’s banking sector also seems to be helping Suharto family members and associates cover up their debt obligations. Last October, the government announced a plan to merge four state banks–with a total of $11.5 billion in nonperforming loans–into one. The six Suharto children and several companies affiliated with them are listed by the government as owing $800 million in bad debts to the four banks. The amount may well be understated: between them, Bambang and Tommy have $635 million in bad loans from just one of the four, Bank Bumi Daya. An official with the bank says that its accounts were falsely reported to the government, including $172 million lent to Hashim Djojohadikusumo, Titiek’s brother-in-law, to buy stock in another bank. Borrowing money to purchase bank shares is illegal in Indonesia. Asked to respond, Hashim’s office said he was too busy for an interview. When TIME informed Habibie of the loan, the President immediately began looking into it.
A genuine investigation into the Suharto booty will probably have to await the next government. A parliamentary election scheduled for June 7, to be followed by a presidential vote in November, could change the political equation substantially. Two leading presidential candidates, Amien Rais and Abdurrahman Wahid, say they would order a trial for Suharto, probably followed by a pardon if he returns ill-gotten gains. Megawati Sukarnoputri, daughter of founding President Sukarno and herself a presidential candidate, hasn’t made her stand clear. Some analysts think she will leave Suharto alone, out of gratitude for his not imprisoning her father.
The children, however, could be in for rougher treatment. “As long as their father is alive,” says a Suharto family friend, “he can probably protect them. After he’s gone, they’re going to have to run.” Three of the six children have homes in the U.S., so prosecutors there could go after them under tough new laws aimed at corruption and money laundering. Bambang, meanwhile, controls two U.S.-listed companies, which could be subject to investigation under the Foreign Corrupt Practices Act.
Suharto himself has at least one strong legal shield: the presidential decrees that laid the foundation for Suharto Inc. Former Finance Minister Mar’ie Muhammad’s anti-corruption watchdog, the Indonesian Transparency Society, has labeled as illegal 79 of the 528 such orders issued between 1993 and May 21, 1998. Yet Suharto was careful to have each decree approved by his rubber-stamp parliament, usually at the end of his five-year presidential terms. Moreover, notes Juan Felix Tampubolon, one of Suharto’s lawyers, Indonesia has a statute of limitations on most offenses: “For every crime he committed, if any, before 1981, the right to prosecute has expired under the statutory period.” For Suharto of Indonesia, that–along with $9 billion in an Austrian bank– should offer considerable comfort in retirement.
With reporting by Zamira Loebis, Jason Tedjasukmana and Lisa Rose Weaver/Jakarta, Laird Harrison/Los Angeles, Isabella Ng/Hong Kong, Kate Noble/London and other bureaus.